Question 1

An example of a conventional environmental cost is:

Accepted Answer

A)  equipment to prevent environmental damage 
B)  provision for potential oil-spill cleanup 
C)  when a firm produces a product that is difficult to dispose of safely 
D)  lost business because of adverse television publicity 
A)  equipment to prevent environmental damage 
B)  provision for potential oil-spill cleanup 
C)  when a firm produces a product that is difficult to dispose of safely 
D)  lost business because of adverse television publicity A

Question 2

An example of a relationship and image environmental cost is:

Accepted Answer

A)  monitoring costs 
B)  provisions for potential oil-spill cleanup 
C)  when a firm produces a product that is difficult to dispose of safely 
D)  lost business because of adverse television publicity 
A)  monitoring costs 
B)  provisions for potential oil-spill cleanup 
C)  when a firm produces a product that is difficult to dispose of safely 
D)  lost business because of adverse television publicity D

Question 3

The 'outside-in approach' of measuring sustainability performance refers to:

Accepted Answer

A)  Develop several key lead indicators first,then for each lead indicator managers can derive a number of lag indicators. 
B)  Develop several key lag indicators first,then for each lag indicator managers can derive a number of lead indicators. 
C)  Develop measures from within the business,then these measures are 'fed through' to external reporting 
D)  Measures are determined externally by outside forces e.g.government regulations,these measures then influence the development of internal measures. 
A)  Develop several key lead indicators first,then for each lead indicator managers can derive a number of lag indicators. 
B)  Develop several key lag indicators first,then for each lag indicator managers can derive a number of lead indicators. 
C)  Develop measures from within the business,then these measures are 'fed through' to external reporting 
D)  Measures are determined externally by outside forces e.g.government regulations,these measures then influence the development of internal measures. D

Question 4

Which of the following costs is included in the five tiers of environmental costs?

Accepted Answer

A)  Contingent 
B)  Private 
C)  External 
D)  Period 
A)  Contingent 
B)  Private 
C)  External 
D)  Period

Question 5

Which statement below is the most correct statement explaining the use of the quality framework (prevention,appraisal,internal and external failure)to analyse environmental costs?

Accepted Answer

A)  The firm is attempting to control and reduce environmental costs. 
B)  The firm is attempting to control and reduce environmental costs.Spending more at the prevention and appraisal stage is likely to be more than compensated by a reduction of costs at the failure stages. 
C)  An analysis of costs at each level is most likely to control and reduce environmental costs overall. 
D)  An analysis of environmental costs is not complete unless costs at all of the given stages are analysed. 
A)  The firm is attempting to control and reduce environmental costs. 
B)  The firm is attempting to control and reduce environmental costs.Spending more at the prevention and appraisal stage is likely to be more than compensated by a reduction of costs at the failure stages. 
C)  An analysis of costs at each level is most likely to control and reduce environmental costs overall. 
D)  An analysis of environmental costs is not complete unless costs at all of the given stages are analysed.

Question 6

Which of the following statements is correct about the inclusion of environmental costs in the firm's management accounting system?

Accepted Answer

A)  Firms using environmental management accounting (EM
A) tend to make environmental costs more visible than firms not using EMA. 
B)  Firms not using EMA may incur environmental costs,but these are often hidden in overhead accounts. 
C)  Firms using EMA may choose to report narrowly (only on costs that affect profits),or more broadly include costs on the external environment caused by the firm's activities. 
D)  All of the given answers 
A)  Firms using environmental management accounting (EM
A) tend to make environmental costs more visible than firms not using EMA. 
B)  Firms not using EMA may incur environmental costs,but these are often hidden in overhead accounts. 
C)  Firms using EMA may choose to report narrowly (only on costs that affect profits),or more broadly include costs on the external environment caused by the firm's activities. 
D)  All of the given answers

Question 7

The need to conform to legal regulations is the only reason firms are currently adopting a sustainability approach.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following represents the environmental management accounting response to product costing,as compared with the traditional view on recording environmental costs?

Accepted Answer

A)  Environmental costs are spread across all processes and production. 
B)  Environmental costs are not explicitly recorded in the accounts. 
C)  Environmental costs are traced to individual products or processes causing the costs. 
D)  Environmental costs are upstream or downstream costs and therefore not included in product costs. 
A)  Environmental costs are spread across all processes and production. 
B)  Environmental costs are not explicitly recorded in the accounts. 
C)  Environmental costs are traced to individual products or processes causing the costs. 
D)  Environmental costs are upstream or downstream costs and therefore not included in product costs.

Question 9

Which of the following is a performance indicator for social performance?

Accepted Answer

A)  Percentage of suppliers who have undergone screening on human rights policies 
B)  Carbon emission reduction 
C)  Revenue growth in local markets 
D)  Percentage of materials used that are recycled 
A)  Percentage of suppliers who have undergone screening on human rights policies 
B)  Carbon emission reduction 
C)  Revenue growth in local markets 
D)  Percentage of materials used that are recycled

Question 10

In terms of the 'quality' framework,which of the following would be classified as a cost of appraisal activities?

Accepted Answer

A)  Monitoring of air pollution levels from the factory 
B)  Auditing environmental risks 
C)  Costs of occupational health and safety claims 
D)  Losses associated with loss of reputation due to public awareness of the firm's non-environmentally friendly activities 
A)  Monitoring of air pollution levels from the factory 
B)  Auditing environmental risks 
C)  Costs of occupational health and safety claims 
D)  Losses associated with loss of reputation due to public awareness of the firm's non-environmentally friendly activities

Question 11

In terms of the 'quality' framework,which of the following would be classified as a cost of internal failure activities?

Accepted Answer

A)  Cost of employee training 
B)  Depreciation of testing equipment 
C)  Fines for environmental damage 
D)  Costs of occupational health and safety claims 
A)  Cost of employee training 
B)  Depreciation of testing equipment 
C)  Fines for environmental damage 
D)  Costs of occupational health and safety claims

Question 12

Which of the following statements about traditional management accounting systems is true?

Accepted Answer

A)  Where environmental costs exist,it is common to find some reporting of environmental costs at the lower levels (tiers 1 and 2). 
B)  Where environmental costs exist,there is very little reporting of environmental costs at the lower levels (tiers 1 and 2). 
C)  Where environmental costs exist,there is very little reporting of environmental costs at the higher levels (tiers 3,4 and 5). 
D)  Where environmental costs exist,it is common to find some reporting of environmental costs at the lower levels (tiers 1 and 2)AND where environmental costs exist,there is very little reporting of environmental costs at the higher levels (tiers 3,4 and 5). 
A)  Where environmental costs exist,it is common to find some reporting of environmental costs at the lower levels (tiers 1 and 2). 
B)  Where environmental costs exist,there is very little reporting of environmental costs at the lower levels (tiers 1 and 2). 
C)  Where environmental costs exist,there is very little reporting of environmental costs at the higher levels (tiers 3,4 and 5). 
D)  Where environmental costs exist,it is common to find some reporting of environmental costs at the lower levels (tiers 1 and 2)AND where environmental costs exist,there is very little reporting of environmental costs at the higher levels (tiers 3,4 and 5).

Question 13

Which of the following statements is correct?

Accepted Answer

A)  Eco-intensity measures measure the relationship of output to input. 
B)  Eco-intensity measures measure the relationship of input to output. 
C)  Eco-efficiency is another term for eco-intensity. 
D)  Eco-efficiency measures are measures of productivity. 
A)  Eco-intensity measures measure the relationship of output to input. 
B)  Eco-intensity measures measure the relationship of input to output. 
C)  Eco-efficiency is another term for eco-intensity. 
D)  Eco-efficiency measures are measures of productivity.

Question 14

Despite the costs involved,measuring environmental and social impacts (sustainability)can provide useful information to assist a firm to achieve a competitive advantage.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following costs is included in the five tiers of environmental costs?

Accepted Answer

A)  Conventional 
B)  External 
C)  Internal 
D)  Conversion 
A)  Conventional 
B)  External 
C)  Internal 
D)  Conversion

Question 16

In what way is activity based costing (ABC)particularly helpful for management seeking to control environmental costs?

Accepted Answer

A)  ABC focuses on cost drivers that are more closely related to the incurrence of costs. 
B)  Because ABC is a relatively recent technique;it is more likely to be useful to managers in today's society,which has recently become environmentally aware. 
C)  ABC focuses on activities that cause costs and selects volume-related cost drivers to allocate those costs to products. 
D)  ABC focuses on activities that cause costs and this focus enables managers to see how environmental costs are generated,and therefore control and reduce them. 
A)  ABC focuses on cost drivers that are more closely related to the incurrence of costs. 
B)  Because ABC is a relatively recent technique;it is more likely to be useful to managers in today's society,which has recently become environmentally aware. 
C)  ABC focuses on activities that cause costs and selects volume-related cost drivers to allocate those costs to products. 
D)  ABC focuses on activities that cause costs and this focus enables managers to see how environmental costs are generated,and therefore control and reduce them.

Question 17

From the following list of costs,calculate the amount of contingent environmental costs.

Accepted Answer

A)  $350 000 
B)  $355 000 
C)  $110 000 
D)  $1 100 000 
A)  $350 000 
B)  $355 000 
C)  $110 000 
D)  $1 100 000

Question 18

From the following list,calculate the total of environmental prevention costs.

Accepted Answer

A)  $225 000 
B)  $150 000 
C)  $175 000 
D)  $255 000 
A)  $225 000 
B)  $150 000 
C)  $175 000 
D)  $255 000

Question 19

Climate change entails many potential costs to businesses.One example is the cost of collecting information about carbon emissions for the purpose of external accreditation.Based on the 'quality cost' mode,this is an example of:

Accepted Answer

A)  Prevention cost 
B)  Appraisal cost 
C)  Internal failure cost 
D)  External failure cost 
A)  Prevention cost 
B)  Appraisal cost 
C)  Internal failure cost 
D)  External failure cost

Question 20

From the following list,calculate the total of environmental external failure costs.

Accepted Answer

A)  $600 000 
B)  $650 000 
C)  $660 000 
D)  $620 000 
A)  $600 000 
B)  $650 000 
C)  $660 000 
D)  $620 000

Exam 17: Sustainability and Management Accounting

An example of a conventional environmental cost is:

An example of a relationship and image environmental cost is:

The 'outside-in approach' of measuring sustainability performance refers to:

Which of the following costs is included in the five tiers of environmental costs?

Which statement below is the most correct statement explaining the use of the quality framework (prevention,appraisal,internal and external failure)to analyse environmental costs?

Which of the following statements is correct about the inclusion of environmental costs in the firm's management accounting system?

The need to conform to legal regulations is the only reason firms are currently adopting a sustainability approach.

Which of the following represents the environmental management accounting response to product costing,as compared with the traditional view on recording environmental costs?

Which of the following is a performance indicator for social performance?

In terms of the 'quality' framework,which of the following would be classified as a cost of appraisal activities?

In terms of the 'quality' framework,which of the following would be classified as a cost of internal failure activities?

Which of the following statements about traditional management accounting systems is true?

Which of the following statements is correct?

Despite the costs involved,measuring environmental and social impacts (sustainability)can provide useful information to assist a firm to achieve a competitive advantage.

Which of the following costs is included in the five tiers of environmental costs?

In what way is activity based costing (ABC)particularly helpful for management seeking to control environmental costs?

From the following list of costs,calculate the amount of contingent environmental costs.

From the following list,calculate the total of environmental prevention costs.

Climate change entails many potential costs to businesses.One example is the cost of collecting information about carbon emissions for the purpose of external accreditation.Based on the 'quality cost' mode,this is an example of:

From the following list,calculate the total of environmental external failure costs.

Management Accounting: Information for Creating Value and Managing Resources

Management Accounting: Cost Terms and Concepts

Cost Behaviour, Cost Drivers and Cost Estimation

Product Costing Systems

Process Costing and Operation Costing

Service Costing

A Closer Look at Overhead Costs

Activity-Based Costing

Budgeting Systems

Standard Costs for Control: Direct Material and Direct Labour

Standard Costs for Control: Flexible Budgets and Manufacturing Overhead

Managing and Reporting Performance

Financial Performance Measures and Incentive Schemes

Strategic Performance Measurement Systems

Managing Suppliers and Customers

Managing Costs and Quality

Cost Volume Profit Analysis

Information for Decisions: Relevant Costs and Benefits

Pricing and Product Mix Decisions

Information for Capital Expenditure Decisions

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